Boeing, union reach deal on 737

Nov. 30, 2011 at 2:46 PM ET

Boeing / Reuters /

An artist's rendition courtesy of Boeing shows a 737 MAX passenger jet in Lion Air livery. Boeing and its machinists union have reached a tentatiev deal on a new contract that located construction of the new jetliners in Renton, Wash.

Boeing has reached a tentative agreement on a contract with its machinists union that would locate construction of the 737 MAX jetliner in Washington state, the union and the aerospace company said Tuesday.

It is not immediately clear what, if any, impact the new agreement, announced Wednesday, would have on a Boeing plant in South Carolina, where the company opened a new production line for its 787 airplane.

The National Labor Relations Board filed a lawsuit earlier this year alleging that Boeing violated labor laws by opening the South Carolina line. The agency claimed that Boeing was punishing Washington state workers for past strikes and said the company should return the work to Washington. Boeing has vigorously denied the charges, claiming it opened the South Carolina plant for valid economic reasons.

The case became a major political issue, with Republican presidential candidates using the issue to bash the Obama administration. While the labor board is an independent agency, it is dominated by appointees of President Barack Obama and settlement of the Boeing case removes a potentially damaging element for Obama in the 2012 campaign.

The labor board brought its lawsuit at the request of the union, so if the union no longer has a dispute, the board would likely stop pursuing the case.

Boeing said it would build the MAX at its facility in Renton, Wash., about 11 miles southeast of Seattle, pending approval of a four-year extension to the contract by the International Association of Machinists & Aerospace Workers, which represents its hourly workers.

The union said in a statement that it would vote next week on the contract extension, which includes Boeing's commitment to build the MAX in Renton.

The proposed MAX contract extension would “secure thousands of jobs while raising Machinists’ pay and pensions,” said IAM District Lodge 751 President Tom Wroblewski.

The proposed contract would boost wages 2 percent a year, plus cost-of-living increases, for the next four years. It would also provide for a bonus program of between 2 and 4 percent, a ratification bonus of $5,000 for each union member and a guarantee that new hires would receive the same pension benefits as current workers. 

The Associated Press contributed to this report.